Construction worker Douglas Quaid (Arnold Schwarzenegger) has been having recurring dreams of a brunette woman named Melina (Rachel Ticotin), and of Mars, which has been colonized. He tells his blonde wife Lori (Sharon Stone) about the dreams, and that he wants to move to Mars, but Lori refuses because she hates Mars. Meanwhile, Mars administrator Vilos Cohaagen (Ronny Cox) has been ruling Mars like a dictator, and the Mars Freedom Brigade, a group of rebels led by the mysterious Kuato, are fighting to end Cohaagen's evil leadership. Quaid visits Rekall Inc, a travel agency which implants memories of vacations in the minds of its customers. Quaid requests a trip to Mars, in which he will be a secret agent. During his implant procedure however, the Rekall technicians pop Quaid's memory cap(before they can implant his ego trip), and he violently lashes out, as if he really is a Mars secret agent. The technicians sedate Quaid and dump him in a Johnnycab which takes him to his apartment building.
He is suddenly attacked by armed men led by his coworker Harry (Robert Costanzo), who had earlier warned him not to go to Rekall. Quaid kills Harry and his henchmen and runs home. He tells a disbelieving Lori about it and goes to wash the blood off his hands. Lori tries to kill him afterwards, but he overpowers her, holding her at gunpoint and demanding answers. Lori is not Quaid's wife, but an agent sent by Cohaagen to watch Quaid after they erased his memory and implanted a new one. Quaid knocks Lori unconscious with the gun after seeing more villains on the video monitor. The chief villain is the evil Richter (Michael Ironside), Lori's real husband. Richter's right hand man is the equally vicious agent Helm (Michael Champion). After an escalator gun battle in the subway, Quaid escapes to a hotel and receives a suitcase from an old ally. Quaid escapes Richter and Helm again.
At an abandoned factory, Quaid opens the case and sees a video recording of Hauser, his former identity. Hauser tells Quaid to go to Mars, find Melina, and stop Cohaagen. Richter and Helm follow Quaid to the Mars spaceport, but he escapes again after Richter shoots a hole in the dome, forcing everyone to grab hold of something to avoid being sucked outside onto the airless surface. Eventually, Quaid meets a Martian cab driver named Benny (Mel Johnson, Jr.), who takes him to Venusville where Quaid meets Melina, but she doesn't believe his story and forces him to leave. At his Hilton Hotel room, Quaid is visited by Rekall technician Dr. Edgemar (Roy Brocksmith), who claims that the chases and the trip to Mars are all part of Quaid's Rekall ego trip. Edgemar brings Lori in, and she tells Quaid to return to her. Edgemar offers Quaid a red pill to wake him from the dream. Quaid shoots Edgemar in the forehead after seeing him sweat in fear, and spits the pill out. Quaid realises he is in reality. Four agents blast into the room and capture Quaid with Lori's help. Richter and Helm arrange to meet them at the service elevator. At the service elevator, Melina kills the agents and fights Lori. Just as Lori prepares to kill Melina, Quaid grabs a gun and shoots Lori in the forehead.
Richter and Helm chase them, as Richter wants revenge for Lori's death. Richter tries to shoot Quaid and Melina while they stand in front of the dome, but Helm smashes Richter's arm down before he can crack the dome. During a car chase with the enraged Richter and Helm, Benny takes Quaid and Melina to the Last Resort, where rebel mutant Tony (Dean Norris) opens a secret doorway for the trio to escape through. Richter, Helm, and soldiers arrive and attack the customers. Helm shoots Tony in the shoulder, but Tony's friend Thumbelina (Debbie Lee Carrington) kills Helm with a Bowie knife. Thumbelina also shoots some of the soldiers. Richter and the remaining soldiers escape and retreat after Cohaagen orders them to get out of Sector G. As punishment for protecting Quaid, Cohaagen shuts off the giant fans in Venusville and closes the entrances to it so the mutants will die from asphyxiation. Quaid, Melina and Benny enter the rebel hideout, where Quaid meets the psychic mutant Kuato (Marshall Bell). Kuato unlocks the secret in Quaid's mind: an alien reactor in the Mars Pyramid Mine which can provide oxygen for the Mars atmosphere. Benny reveals he is one of the villains after shooting Kuato during a gun battle with Cohaagen's soldiers. Richter delivers the killing shot to Kuato, and Quaid and Melina are taken to Cohaagen. It turns out Hauser worked for Cohaagen, and volunteered to become Quaid in order to infiltrate the rebel base and kill Kuato.
Quaid and Melina escape and head into the Mine to start the reactor, but Benny attacks them with a drilling mole vehicle. Quaid kills Benny with a drill hammer. Then Quaid and Melina kill Cohaagen's remaining soldiers. Quaid battles Richter on a freight elevator. Quaid flips Richter over the side, guillotine ridges cut off Richter's arms and Richter falls to his death. In the reactor control room, Cohaagen attempts to blow up the reactor, but Quaid and Melina stop him. Quaid throws the bomb down a shaft, but the explosion causes a vacuum, sucking Cohaagen outside where he decompresses and dies. Quaid starts the reactor, but he and Melina get sucked outside. They are saved after the reactor melts the ice core and releases the oxygen for Mars. This also saves everyone in Venusville. Mars now has a blue sky and an atmosphere. Tony, Thumbelina, and the other humans and mutants stand on the Mars surface, gazing at the blue sky. Quaid and Melina admire the blue sky and kiss each other.
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